Revolution Is In The Air

Tired of commercials, bad music and censorship, 2.5 million U.S. households are tuning in to XM and Sirius radio stations, and analysts say that number is likely to skyrocket by 2010

June 27, 2004|By Maureen Ryan, Tribune staff reporter.

FAMOUS LAST WORDS -- MEDIA EDITION:

"No one will ever pay for television."

"No one will ever pay for premium cable channels."

"No one will ever pay for satellite TV."

"No one will ever pay for music on the Internet."

All of those commonly held beliefs have fallen by the wayside in recent years.

And here's the latest bit of conventional wisdom to be spectacularly disproved:

"No one will ever pay for radio."

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Tell that to the folks at XM satellite radio, whose subscribers just topped 2 million.

Between XM and its rival, Sirius, almost 2.5 million American households have satellite radio, and if those relatively paltry numbers don't scare "terrestrial" radio executives, they should.

Users of one satellite radio online discussion board were unsparing when asked why they abandoned free radio for the "HBO" version of it, which costs $10-$13 a month.

"Regular AM and FM where I live is terrible. It's a small-town market with hardly any national programming of talk radio," said one XM subscriber. "Because I hate commercials!!!" chimed in another subscriber. "To hear stuff that FM will never play," added a third.

Nobody's writing traditional radio's obituary any time soon. But half a dozen financial analysts predict that satellite radio will have 25 million subscribers by 2010.

If that number doesn't scare mainstream radio execs, the rumblings of mutiny from one of the medium's biggest names should.

No less than Howard Stern, America's leading shock jock and the self-proclaimed "King of All Media," has been openly talking of making the leap to satellite radio in recent weeks.

Stern has been unhappy since his syndicated show was permanently bounced from six Clear Channel radio stations in April, after on-air comments by Stern led to record indecency fines from the FCC. (Clear Channel settled with the FCC over the Stern-related complaints by paying a fine of $1.75 million and admitting that the content of some of the Stern broadcasts was, in fact, indecent.)

There is also an effort by some in Washington to have more restrictive indecency rules apply to satellite and cable broadcasts.

Unhappy about the resignation of his corporate protector, Mel Karmazin, former CEO of Infinity's owner, Viacom, and dismayed by what he sees as persecution by a newly emboldened FCC, Stern has talked up a move to Sirius or XM as the solution to his troubles.

"I know our days have been numbered," he said on the air in May. "But now our days are really numbered."

Stern is desirable

For their part, executives at both satellite companies say they'd love to sign up the infamous shock jock.

"We're uncensored and we offer true national coverage," XM programming chief Lee Abrams says. "We'd be fools not to" talk to superstars like Howard Stern and Rush Limbaugh, though he notes that both are currently under long-term contracts to their current employers.

As subscription services, satellite radio companies are not subject to the same indecency regulations as terrestrial AM and FM radio, making them the perfect format for an envelope-pushing entertainer such as Stern as well as shock jocks Opie and Anthony and Bubba the Love Sponge. Opie and Anthony and Bubba are currently without gigs but are often mentioned as potential big-name additions to the realm of satellite radio.

Radio executives don't see satellite as much of a threat right now, but if someone like Stern made the leap, that would change the equation. "Now that becomes a big deal," says Bill Gamble, program director of Chicago's WZZN-FM 94.7.

Even if he doesn't go to satellite radio, Stern has sure made all his listeners aware of the medium, which in the past three years has gone from being a George Jetson-esque novelty to being a standard feature on more than 1 million cars in the 2005 model year.

Signing up for satellite radio isn't much different than getting satellite TV. In both cases, consumers must invest in some hardware and pay a monthly fee ($13 for Sirius and $10 a month for XM). Buyers of new cars pre-equipped with one of the services need only pay the monthly fee, but dozens of aftermarket car radios, adapters for standard radios and even boomboxes for home use are now available, starting at about $100 or so.

All the radios get their signals from satellites, so the XM boombox I've been testing out at home has to sit near a window. And though satellite service can theoretically cut out in the car if you hit a patchy coverage area, both companies use "repeaters" on the ground to boost their signals; the Sirius car radio I've been using for several months has only rarely had momentary glitches.

Aside from CD-quality sound, what's drawing folks to satellite radio? Access to more than 100 different channels of news, traffic, talk and music -- and the music channels are all commercial-free.